GreenSignal Bio Pharma IPO runs into rough weather

The initial public offering (IPO) of Chennai-based pharmaceutical company GreenSignal Bio Pharma failed to get any response from institutional investors on the sixth day of the offering.

The timeline for IPOs is typically three days. GreenSignal had extended its IPO timeline twice - from November 11 to November 17, and then from November 17 to November 22. Besides announcing the extended timeline for the second time, the company also lowered its pricing on Thursday from Rs 76-80 per share to Rs 68-76 per share and is now hoping to raise Rs 110 crore at the upper end of the price band as opposed to Rs 116 crore earlier.

As of 5 pm IST, the issue had garnered an overall subscription of 1.06 times, data put up on NSE shows. The retail quota got bids for nearly 9 times the shares on offer, while the category for rich investors was subscribed 1.16 times.

However, as per current norms, the issue is still considered undersubscribed as the category for institutional investors or qualified institutional buyers is yet to attract bids. GreenSignal Bio had reserved as much as 75% of the issue for QIBs,and needs to see an equivalent amount of bids from these investors for the offering to go through.

"We have reduced the price, which is a positive. There are two more day left and we expect institutions to come in on Monday and Tuesday," said the company's managing director P Murali.

Indian Overseas Bank (IOB) is the merchant banker to the issue. GreenSignal is a vaccine manufacturing company with global operations, and develops BCG vaccine.

The benchmark BSE Sensex has slid about 5% since November 8, following the Trumph win and demonetisation of high-value currency. During this period, foreign portfolio investors have sold shares worth over $1 billion.

Investment bankers are on a wait and watch mode and feel that it will be tough to hit the market with IPOs at this juncture. IPOs are likely to get deferred to the next year or even the next fiscal. "If shares of listed firms start falling, why would investors want to bet on new names with no track record," said an investment banker of a top domestic firm, requesting anonymity.

Some experts feel banks may find it difficult to operationalise the Asba (applications supported by blocked amount) system. In Asba, an IPO applicant's account doesn't get debited until shares are allotted.

Approval of seven IPOs worth Rs 2,500 crore might lapse in the next three months if they don't hit the market, data shows. Timelines of other big-ticket IPOs gearing up to hit the market may get impacted as well, said experts. IPOs worth about Rs 24,500 crore have hit the market in 2016.